This chart courtesy Dresdner Bank via the Financial Times. It shows bank debt relative to gross domestic product.
This chart explains the overall strength of the dollar relative to the euro. It’s also one of the most profound commentaries on the grave state of the world economic environment I’ve seen.
My wife says the news is too dour. She wants more cheerful stuff.
Here you go, honey.
Flowers and bunnies.
Hope it helps.
From semi.org:
The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars
| Billings | Bookings | Book-to-Bill | |
| Aug-08 | 1,064.50 | 866.8 | 0.81 |
| Sep-08 | 927.3 | 649.9 | 0.7 |
| Oct-08 | 871.4 | 839.7 | 0.96 |
| Nov-08 | 806.8 | 783.8 | 0.97 |
| December 2008 (final) | 672.4 | 579.1 | 0.86 |
| January 2009 (prelim.) | 592.2 | 285.6 | 0.48 |
| Source: SEMI Feb 2009 |
Needless to say, these numbers are pretty damn bad. Keep in mind, its a rolling 3 month average. Bookings lead billings. Told ya there was too much memory spending.
Expect to walk in Monday and see that the Fed has come up with yet another quick fix for the ailing banks. Citigroup (C) and Bank of America (BAC) are clearly on the big huge trouble list as both stocks are in virtual freefall on fears they will be nationalized. Though I hope they can come up with something to soothe the markets, I don’t see what that would be as efforts to restore stability have not succeeded thus far and the option list continues to shrink. They’ve already taken rates virtually to zero, they’re already swapping bad paper for cash to help banks meet short-term commitments, they’re already guaranteeing commercial paper, savings accounts, bank issued debt. There can’t be much left in the Fed toolbox.
Confidence is extremely wounded in the market. The Dow Jones Industrial Average put in a 6 year closing low yesterday. If they close below 7400 I think you’re going to hear a lot of people talking about 6500.
Unfortunately, the cure for our ills remains time to work off the excesses of the last several decades. The system needs to be deleveraged. Policymakers have been pumping more air into the broken balloon for the last several months, which likely prolongs the downturn as further debt spending – spending our future anticipated revenue – only compounds the leverage within the system.
The dollar has been strong of late. This seems completely backward to me. Treating the dollar as a safe haven while its being so mercilessly diluted seems incongruent with reality.
Good luck this weekend, Ben and Tim. You’ve got a lot of heavy lifting to do.
Apple has been loading up on NAND again according to Fortune magazine via Appleinsider. Typically this behavior happens the quarter before a new product introduction. At present it’s unclear what they want it for – a new iPhone? A flash netbook?
Allegedly there have been some quality control issues with Apple’s other NAND supplier, Hynix, but I am unable to confirm that at present.
Spot prices haven’t done anything for the last several days except bleed slightly lower. This explains the recent spot price strength and NAND’s stability relative to DRAM.
Congressman Peter DeFazio [D] of Oregon introduced HR 1068 to the healthcare stimulus bill: “Let Wall Street Pay for Wall Street's Bailout Act of 2009”, which aims to impose a 0.25% transaction tax on the “sale and purchase of financial instruments such as stock, options, and futures.”
Here’s what I wrote to my representatives:
The transaction tax proposed will hurt liquidity in the market place by discouraging trading. A .25% tax is going to put many trading models out of business, hurting market liquidity at a time when market liquidity is vital to the health of our economy. Why would you penalize investors for the faults of banks? I am about to embark on a new small business trading stocks for a living. This would put my business plan in direct jeopardy. You already tax me significantly for my gains -- now you want to tax me for my losses, too? Give me... and the investor... a break. This is an extremely regressive, misinformed and potentially catastrophic tax proposal. Please leave the stock market alone, it's having enough trouble.
Here’s the link if you want to craft your own objection.
For the first time in a long while, market share data indicates Apple is losing share in PCs. Their market share measured in dollars dropped from 16.4% to 13.7% according to NPD.
Apple Inc.'s (AAPL) unit sales of computers through U.S. retail channels fell 6% in January from the same month in 2008, the first monthly decline in three years, according the market research firm NPD Group.
The data suggest that Apple's premium pricing, which helped boost revenues when demand was strong, may be hurting the company now that consumers are being more careful about their spending amid an economic downturn. -- WSJ
The article goes on to discuss how Apple computers cost twice as much as Windows-based computers.
Though the article didn’t get into it, iPod sales appear to be tracking to 9.0 – 10.0 mil for the quarter, according to Piper, who says street consensus is 9.5 mil. Most of the notes about this data were released yesterday.
Apple makes expensive, great products. PCs are admittedly not as elegant as Macs but they do access the internet and play media and that’s what a home computer is used for 95% of the time. The cost difference between the Mac and PC is dramatic enough that even Apple’s cache is at risk in a frugal and fearful economy.
Revenue of 28.8 bil missed consensus of 31.9 billion. EPS were in-line due to tight expense controls and selective product shipments in the inkjet category. Though units were decent, the strength was clearly at the low end of the line. Inventory was built year to year in printers and PCs. Guidance of 112.4 – 116.0 billion and $3.76 - $3.88 is below prior 127.5 – 130.0 billion and $3.88 – 4.03.
While the earnings outlook was maintained, I don’t know how they’ll actually get there. In the current quarter, they throttled back inkjet hardware shipments to inflate overall printer margins. As ink is almost entirely profit, its the hardware component that has negative margin effect. The problem in doing so is that less HP printers out there eventually leads to less ink opportunity. As channel inventories grew in most categories, this is likely to dampen recovery for the company if and when demand ticks up as they’ll have to cut through the channel inventory.
Though earnings estimates remain relatively solid, revenue growth was worse than my expectations – every category was down. Their market share gains are apparently due to aggressive pricing. Cost controls were better but it was due to deliberate cutbacks in R&D and a lower tax rate.
HP appears to be manipulating results to show better earnings. Business dropped significantly – it’s expected that you’d see some weakening operating metrics. Instead HP is trying to obscure that weakness to please investors than properly investing in their future. Think about it. They’ve been offering aggressive financing when the rest of the world is pulling back on it, they’re investing less in their future by cutting R&D, they’re seeding the inkjet business with less hardware to prop up margins which will lead to lower ink sales in the future, channel inventories are higher than normal when everyone else is cutting inventories. Does this sound like they’re managing the long-term or the short-term business?
While HP is cheap based on earnings estimates (its under 9* 2009 estimates), it’s inconsistent with my world view to be long the stock. Weisel upgraded the stock so it’s only down a buck from last night’s close. I sold the balance.
HP has been showing solid market share data all quarter. Units have remained strong though pricing remains under pressure. Generally, HP makes most of their personal computing money in printer ink, the lifeblood of the company. Ink channel inventories were somewhat below typical levels last quarter. My guess is they didn’t tick up much as most distributors are so focused on decreasing inventories.
In this market, if the company hits numbers, guides next quarter down less than 10% vs consensus and doesn’t have a significant drop off in operating metrics as a result, the stock is going to be perceived as cheap. While I’d love to be negative on them because they sell PCs to consumers, I just don’t see the degradation in their business that calls for a bearish stance. Dell, I see it. HP isn’t an expensive stock and they’re very well managed. I think it’s a safe port in a storm.
And yeah, I’m long some.
Estimated Reporting Date Symbol Revenue Estimate Current Q Operating Profit Estimate Current Q EPS Estimate Current Q EBITDA Estimate Current Q Revenue Estimate Next Q Sequential Revenue Growth Estimate, Percent Operating Profit Estimate Next Q EPS Estimate Next Q EBITDA Estimate Next Q Revenue Estimate Full Year Operating Profit Estimate Full Year EPS Estimate Full Year EBITDA Estimate Full Year Revenue Estimate Next Year Operating Profit Estimate Next Year EPS Estimate Next Year EBITDA Estimate Next Year 02/18/2009 ADI 475.8 50.4 0.16 117.7 430.2 -9.57% 38.2 0.10 112.9 1,808.8 193.1 0.54 354.8 1,956.9 299.5 0.86 475.7 02/18/2009 BIDU 132.7 48.0 1.32 60.8 117.4 -11.51% 36.7 0.94 49.8 456.1 162.3 4.48 210.7 607.4 215.0 5.71 276.6 02/18/2009 CMCSA 8,640.4 1,660.3 0.22 3,315.2 8,825.0 2.14% 1,732.5 0.23 3,332.0 34,138.0 6,666.5 0.89 13,086.9 35,867.3 7,221.8 1.02 13,725.9 02/18/2009 HPQ 31,927.3 3,057.0 0.93 3,690.4 30,951.4 -3.06% 2,946.2 0.89 3,414.4 126,523.0 12,299.2 3.77 15,573.9 130,106.5 13,378.0 4.14 16,161.6 02/18/2009 IM 8,871.7 101.1 0.37 128.6 7,886.0 -11.11% 78.7 0.26 102.5 34,549.4 376.3 1.41 458.2 32,167.8 361.8 1.27 432.7 02/18/2009 ITRI 442.5 47.8 0.72 61.5 449.9 1.67% 49.7 0.76 61.5 1,919.0 229.7 3.37 282.2 1,922.3 237.4 3.68 291.7 02/18/2009 NILE 93.4 8.0 0.35 8.6 62.6 -32.92% 2.4 0.11 3.2 302.9 18.6 0.86 20.9 286.0 16.3 0.78 20.4 02/18/2009 PCLN 377.8 55.6 1.05 61.5 412.6 9.21% 44.9 0.81 52.1 1,856.5 331.3 5.77 364.0 1,942.9 333.6 5.84 367.9 02/18/2009 SNPS 335.0 79.2 0.41 104.0 338.6 1.06% 78.3 0.40 105.0 1,384.2 319.1 1.64 419.0 1,413.0 330.5 1.68 450.0 02/18/2009 VCLK 130.1 18.1 0.12 27.6 131.5 1.07% 20.0 0.13 28.7 543.1 86.5 0.58 119.6 566.7 94.6 0.66 123.7 02/18/2009 WFMI 2,484.9 52.1 0.15 130.2 1,907.5 -23.24% 57.3 0.17 126.5 8,174.9 239.4 0.65 508.4 8,690.7 260.8 0.75 557.7 02/19/2009 BRCD 441.7 95.0 0.13 109.0 490.0 10.92% 94.1 0.11 118.0 1,917.9 374.6 0.49 486.0 2,061.4 402.8 0.55 -- 02/19/2009 EXPE 631.1 123.7 0.24 153.8 615.5 -2.48% 126.0 0.18 132.5 2,947.5 646.7 1.27 764.0 2,802.8 601.6 1.15 706.3 02/19/2009 INTU 796.2 157.5 0.27 162.1 1,479.8 85.85% 828.0 1.67 841.0 3,258.8 924.7 1.79 1,018.0 3,517.2 1,041.3 2.02 1,187.6 02/19/2009 JCOM 61.6 27.3 0.42 29.2 63.8 3.68% 26.9 0.44 -- 242.5 104.4 1.65 116.2 258.6 110.8 1.74 127.3 02/19/2009 MXWL 21.5 (3.6) (0.20) (2.4) 22.0 2.44% (3.0) (0.16) (1.9) 80.1 (14.6) (0.98) (9.0) 99.1 (8.9) (0.44) (3.4) 02/19/2009 NANO 17.5 -- (0.27) -- 15.5 -11.43% (4.4) (0.29) (2.1) 99.1 -- (0.85) -- 77.2 (7.2) (0.85) 2.1 02/19/2009 NEM 1,416.2 310.5 0.25 444.4 -- #VALUE! -- 0.32 -- 6,117.0 1,931.0 2.03 2,294.3 6,204.7 1,774.0 1.85 2,640.0 02/19/2009 RMKR 14.2 -- (0.24) (2.6) 13.5 -4.77% -- (0.17) (1.2) 67.0 -- (0.77) (7.6) 57.0 -- (0.50) (0.6) 02/19/2009 S 8,548.9 (355.3) (0.03) 1,650.8 8,297.5 -2.94% (60.0) (0.04) 1,610.9 35,758.0 (1,187.1) 0.07 7,553.3 32,723.4 (878.0) (0.17) 6,280.1 02/19/2009 SCMR 16.8 (15.3) (0.03) (11.0) 19.0 13.43% (17.1) (0.03) (10.0) 73.1 (59.7) (0.08) (49.9) 87.8 (69.2) (0.05) (53.6) 02/19/2009 TSCM 17.3 (0.0) 0.00 1.4 15.7 -9.16% (1.2) (0.03) -- 72.7 2.7 0.11 8.4 66.0 (1.4) (0.02) 5.3 02/19/2009 UNTD 263.1 49.2 0.34 60.4 259.2 -1.46% 50.1 0.30 59.6 676.3 158.9 1.27 185.7 1,054.8 191.6 1.31 246.5 02/19/2009 WBMD 105.8 15.5 0.18 23.9 90.1 -14.87% 4.8 0.07 14.2 377.0 45.1 0.54 -- 424.0 53.6 0.62 90.3 02/19/2009 WMT 97,175.9 5,195.1 0.75 6,917.9 104,318.9 7.35% 5,719.6 0.85 7,496.8 421,946.6 23,768.0 3.55 31,218.3 451,501.7 26,031.8 3.91 33,209.2 02/20/2009 LOW 10,067.0 361.1 0.12 766.5 11,775.1 16.97% 840.0 0.32 1,236.5 48,287.9 3,817.8 1.50 5,414.4 47,924.4 3,328.7 1.28 4,987.0
